Crazier things have happened

Crazier things have happened

What does a company do when everything they have tried has failed miserably? They see that their blockbuster drug is about to face generic competition and know they have nothing in their pipeline that will come remotely close to replacing the lost revenue. Do they make a bold move and acquire what they need to stay relevant in diabetes or do they accept their fate and move on?

Well if you’re the folks at Sanofi (NYSE:SNY) you just might do something crazy. Yes the rumor mill is at again and the latest is a doozy as Diabetic Investor is hearing that the company has been sniffing around MannKind (NASDAQ:MNKD).  Now before everyone jumps off the deep end here keep in mind Sanofi is not the only company who’s been rumored to be interested in MannKind. Novo Nordisk (NYSE:NVO) has also been rumored to be interested.

It’s also very important to remember that MannKind has never been shy about adding fuel to the rumor mill fire. Nor would it surprise Diabetic Investor if MannKind was the source behind all these rumors. With the PUDFA date approaching for Afrezza many believe an FDA approval will be the catalyst making a deal happen.

A couple of quick points here more like a sanity check. First and foremost keep in mind that Sanofi is the same company who couldn’t pull the trigger on buying Bayer’s glucose monitoring unit. A deal that was on, then off, then on and then off.

Second, even if the rumor turns out to be true Afrezza isn’t the answer for Sanofi. Lantus is a mega-blockbuster with sales of nearly $8 billion annually. Even the most aggressive estimates for Afrezza show it taking years before the drug comes close to reaching blockbuster status. As long time readers of Diabetic Investor know we have never believed Afrezza would amount to more than a niche product with sales in the hundreds of millions at best. As we have noted in the past it’s not like Afrezza doesn’t have a place in the market, rather the drug faces several notable obstacles.

The facts show that everything Sanofi has done in diabetes other than Lantus has been a series of failures. Apidra, their short-acting insulin is going nowhere in a hurry. The way cool iBGStar, the company’s attempt at entering the ultra-competitive glucose monitoring market is now way dead. The company withdrew the NDA for Lyxumia, their once-daily me-too copycat GLP-1 from the FDA. U300, the product that is supposed to replace Lantus, is nothing special and has issues.

Now if Sanofi was smart they just might be bold and sell their diabetes unit to AstraZeneca (NYSE:AZN). As we noted when Pfizer (NYSE:PFE) was pursuing Astra the only thing missing from Astra’s diabetes portfolio was insulin. Should the company be able to add insulin’s to their portfolio they would be in much better position to compete with Lilly (NYSE:LLY). The facts are that Astra needs insulin’s to reach their very aggressive estimates for their diabetes unit.

Now some might see such a move as an admission by Sanofi that they have failed. Frankly Diabetic Investor doesn’t see it that way.  The diabetes drug business is changing and like the device market is headed down the road to commodization. Payors are increasingly looking for single source suppliers which make Lilly’s strategy so intriguing. Given that it’s unlikely that they could acquire Astra, it just might be time to get out of diabetes when they can. To Diabetic Investor this is not an admission of failure but a sound business move.

Still Diabetic Investors gets the impression that Sanofi is like a fly fisherman standing hip deep in water for hours on end but not catching any fish. They keep casting their line in the water but still the fish just aren’t biting. They keep changing their lures but still nothing. At some point an experienced fisherman realizes that it’s time to move on, time to find a different lake or stream. The fact is when it comes to diabetes Sanofi caught one huge fish years ago but hasn’t caught anything since then. Perhaps it’s time to fish a different area.